LG Energy Solution Shares Surge on Short-Selling Ban

by Warren Seah

LG Energy Solution saw a significant increase in its shares on Monday, driving a rally in battery stocks, due to the resumption of a ban on short-selling in South Korea. The South Korean electric-vehicle battery maker experienced a sharp jump of up to 24%, reaching 500,000 Korean won ($381.77). This was the largest one-day percentage gain since its listing in January 2022, surpassing the benchmark Kospi’s gain of over 4% during afternoon trading. Other local EV battery stocks, Samsung SDI and SK Innovation, also saw a rise of around 10%.

The surge in stock prices was primarily influenced by the decision of South Korean financial regulators to reimpose a ban on stock short-selling for eight months, which led traders to cover their previous short positions for rechargeable-battery stocks, according to Shinhan Securities. In response to the ban, foreign investors became net buyers of local stocks, specifically rechargeable-battery makers. The ban is part of regulators’ efforts to expand an investigation into alleged wrongdoing by investment banks involving the selling and buying back of borrowed shares at lower prices, in order to profit from the difference. Regulators have also expressed their intention to protect the interests of retail investors by reforming this trading practice.

As a result of the battery-driven rally, the Kosdaq market in South Korea surged over 6%, leading to a brief suspension of trading in the second-tier market. Additionally, strong foreign buying of local equities and increased risk appetite following recent gains on Wall Street pushed the Korean won to a three-month high against the US dollar, with USD/KRW falling 1.7% to 1,299.55—the lowest level since early August.

Writer: Kwanwoo Jun

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